FE Editorial : Don’t bail out MTNL/BSNL

SummaryWhen the Cabinet deliberates over the telecom ministry proposal to give a R12,000 crore bailout to telecom PSUs BSNL and MTNL, it would do well to keep in mind the proposal is anti-competitive and makes no commercial sense, especially for a government that is so cash-strapped it is asking cash-rich PSUs like LIC and NMDC to, if need be, bail it out by participating in sales of other PSU shares.

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with customers—only 55% of BSNL’s subscriber base is active and the figure is under 40% for MTNL, while that for the top 3 private telcos is over 93%. While private telcos service 1 million customers for every MHz of spectrum they have, the PSUs service just 0.37 million—this means the PSUs have way too much spectrum. Neither has any turnaround strategy that goes beyond trying to earn revenues from non-core areas like renting and leasing of real estate space, towers, and leasing of the CDMA network. MTNL, for instance, hopes to get R10,000 crore through sales of land assets—it has around 2,30,000 sq m of commercial land and 3,80,000 sq m of residential land. Why not sell the PSUs to strategic investors who can turn them around, apart from giving the government some good money?